Record year for stockmarket

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We keep hearing it: It's been a stellar year for the New Zealand stockmarket.

The NZX50 hit an all-time high of 4983.6 points last month from 4066.5 points at the start of the year.

And it's been a record trading year for the local bourse.

The total number of trades increased by 31.6 per cent compared to last year and the total value traded was up 47.9 per cent compared to last year to $39.5b.

While the stockmarket has pulled back a little in the past month, it is still sitting more than 15 per cent above where it started the year.

The NZX has seen a spate of listings and the government asset sales, new investors jumping into the market, old investors returning and a flood of KiwiSaver funds adding value to the market.

The landscape is likely to change next year as the Reserve Bank raises interest rates and government asset sales peter out.

But experts say the NZX's good run has not yet come to an end.

Craigs Investment Partners adviser Stuart Hardie says the only way to look at what the market has done this year is move "from whoa to go", with the low interest rate environment driving the market.

The official interest rate has remained at 2.5 per cent since April 2011, attracting investors back into the sharemarket looking for a better return, he says.

Listings, especially of bigger companies have added "more size and more depth" and give KiwiSaver funds somewhere to go.

This year the government partly sold down its stake in Mighty River Power, Meridian and Air NZ, with Genesis still on the to-sell list, probably.

Whether New Zealanders believe the government's asset sales programme is the right thing or not it has increased the sharemarket's profile, Hardie says.

"Companies are using the sharemarket for what it's for: raising capital."

In the case of Mighty River Power 113,000 retail investors bought shares. Some 62,000 mum and dad investors took a slice of the Meridian pie and last month investors snapped up 221 million shares in Air New Zealand.

There were also listings of non-state-owned companies, such as Z Energy, The Mad Butcher and Synlait Milk helping to add total of $7.2 billion in new capital listed on the NZX compared to $1.6b for last year.

Market commentator Arthur Lim says despite the attention created by asset sales, mum and dad investors' appetite for initial public offerings has been "severely dampened and jaded" with the three government selldowns so far.

"It hasn't been a pretty experience."

But overall the sharemarket has done well on the back of the strong New Zealand economic outlook, Lim says.

Rakon, the producer of crystal components for smartphones and weapons was also slammed this year with the stock losing more than half its value.

Boutique beer company Moa suffered a similar plunge following distribution troubles earlier in the year.Hardie says Moa is trying to do and say the right things but some times the market "gets the pip".

"The market's pretty cutting when things don't go the right way."

Listed retailers are beginning to benefit from consumers loosening their wallets in the lead up to the all-important Christmas trading period after a tough start to the year, he says.

Diary stocks will continue to flourish next year.

Synlait, which floated in July at $2.20 has seen its share price riseto just below $4 this week was the best performing new comers of the year, Hardie says.

Likewise alternative milk company A2 milk has gained nearly 40 cent, trading at about 75c this week.Hardie says now it's possible for non-farming kiwis to get exposures to the sector.

The Christchurch rebuild will all but ensure construction companies will benefit, he says.

The prospect of rising interest rates next year will affect the appeal on shares, but Hardie says rates will need to rise by more than half a percentage point before people pull their money out of stocks and put it back in the bank.

This year's listings have been "pretty grunty" and while there will be more listings next year, it is unlikely there will be 10 big listings.

Lim says the biggest change next year will be investors putting their money into growth companies, which while riskier, will out-perform during a period of economic growth.

NZX could gain as much as another 10 per cent in 2014 if companies can continue to improve profits.

There's demand for more listings heading into the New Year, especially with the continued investment of KiwiSaver funds, he says.

This year's best and worst from a shareholder's perspective:

Shareholders' Association chairman John Hawkins says he focuses on the pluses and minuses of the fundamentals of different companies, including their governance.